When most people think about bankruptcy, they think it must apply to the other person. They have been responsible for their finances and the general belief has been that only people who are careless file a bankruptcy. Actually, that is about as far from the truth as anyone can get. In most situations, bankruptcy is a result of a series of events that happen to people that is beyond their control. True, just as in any situation in life one can look back and say maybe they ought to have done something differently, but that is actually asking to have the ability to see the future. None of us has an accurate crystal ball.
Many people have lost income as a result of the “Great Recession” of the last few years. In order to survive, savings have begun to dwindle as most of their money needs to go towards the day-to-day expenses. One of the earliest indicators that a person is in financial trouble is that they don’t have savings. What often results after the depletion of savings is that people begin using credit cards to cover the usual emergencies that hit every household. Also, there is no room even for the maintenance items we all need in life.
The next sign is that you are not able to make it to the next pay day without running out of money. That is a sign of two things. Either you are spending too much money or you do not make enough money or both. One has to be able to make it to the next pay check on a regular basis or there is a collapse in the future. Usually it is because our credit card payments begin to creep upwardly until we are actually paying for items we bought some time ago. An interesting statistic says that the average American is paying debt on items that they have long since broken or outgrown. That leaves nothing for future purchases.
If your charges exceed the amount you pay every month, you are heading toward trouble. The long term cannot be sustained. Normally, one can continue with this pattern just long enough to get into trouble. If you are reduced to paying just the minimum on your cards, be ready for some depression. If you have a significant balance at all, it can take as long as 39 years to pay off debt if all you are doing is paying the minimum.
Another trick people often use to delay the final inevitability of bankruptcy is to ask for an increase in credit so they can continue charging more than they need. This is obviously going to get you into trouble, but people do what they have to do to survive. It is only when credit cards are “maxed” out that people truly realize what they have done to themselves financially. The depression leads to avoiding creditors and buying impulsively because deep down you know you can’t pay anyway.
The final sign that you need to file bankruptcy is the willingness to do business with payday loan companies. In the writer’s opinion, this is legalized organized crime. It is almost a certainty that if you cannot quickly extricate yourself from the use of these loans, you will need to file bankruptcy. Dealing with these companies is such a desperation move that it almost equals a cry for help.
We ALL make mistakes in our investments, debts and lives. Bankruptcy very often lets us get back on our feet without shutting down everything we have built. If you have made mistakes or even if life has taken directions that cannot be predicted, talk to a qualified bankruptcy attorney. At Bailey & Galyen, we care about the situation you are in and will try very hard to help you out. Will bankruptcy work for everyone?
Absolutely not. That is why we offer a free, no-obligation appointment. We will go over the facts of your individual case and let you know what options are available. We will give you non-bankruptcy options as well.